Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Debate between Earl of Lytton and Lord Cormack

Wednesday 10th November 2021 Grand Committee

[The Earl of Lytton (CB)]

My Lords, noble Lords will know of my professional interest in business rating and that I was at one time an employee of the Inland Revenue Valuation Office Agency. I added my name to this clause stand part debate for reasons very much along the lines that the noble Lord, Lord Hunt, set out in making an excellent case for why this clause should be challenged.

I give the Government their due: they have made a massive commitment to the relief of business rates during the pandemic, but I do not believe any business thought, following a relatively modest individual level of relief, and given the overall scale of the impact of the pandemic on business activity, that the Government would then make an arrangement such as to eliminate a main ground of material change of circumstances for everyone.

That is the purpose of Clause 1. It is a binary choice; it is either in or out. My understanding is that the Government are not going to concede on the point so this will probably be my last comment on this bit of the Bill. Clause 1 is the only bit of the Bill that concerns me.

Although I welcome the Chancellor’s further business rates announcements, the fact is that the underlying problems have not gone away. I have very little doubt that someone in HM Revenue & Customs thought quite hard about this and concluded that the removal of a Covid clause for material change of circumstances also conveniently eliminated many other forms of material change, in so far as it would probably be impossible to make a reliable distinction between one and the other. I guess they calculated that those who had not benefited at all could be ignored—that they could afford to concede a short-term position but recover, no doubt with added interest, in the longer term—something they would keep quiet about in the interim. HMRC would thus hold to the mantra of fiscal neutrality, which I have mentioned in the House before, and reinforce its view that there are too many appeals, that managing appeals does not sit easily with the general direction of travel, and that making things administratively cheap to run trumps fairness and equity to ratepayers in a system that has become overstretched, if not overstressed, by the demands made of it over many years. This of course has followed the earlier massive reductions in the capacity of the Valuation Office Agency.

Whatever may be promised by way of additional resources to that agency, which is a critical part of all this, it will be years before the capacity and technical excellence of a once venerable body of professionals gets back to anything near its former self, always assuming that the new resources—if indeed they are new—are other than a race to develop some automated valuation algorithm.

The Government are particularly good at window dressing, but in making a promise of £1.5 billion to be spent by local authorities for further relief of certain business rate payers, they make no reference to the manner, timing or precise purposes to which this relief will be put, so it remains, to some extent, a “jam tomorrow” aspiration. The Minister might like to enlighten the Committee—here I follow the noble Lord, Lord Hunt of Kings Heath—on the origins of the £1.5 billion figure and how it has been calculated, just as every business rate payer and every billing authority would like to know how it will be distributed in practice.

While I am at it, perhaps the Minister can also tell us when the promised further guidance that relates to that distribution will be published. I may be accused of harbouring dark suspicions, but I suspect that it will be too late do anything about it for the 2022-23 fiscal year. This will also be the assumption of local government finance officers and businesses alike, if the Minister cannot assure us of an early date, this side of mid-January 2022, when finance officers will be fixing their budgets and businesses considering their forward programmes. A company that got hammered—excuse the term, but I think it is right—in 2020, may not get any help until 2023. If I am right, that will be just another facet of the creative accounting by the taxman which ultimately costs jobs, blunts enterprise, discourages investment and dents productivity—end of homily.

On previous occasions, I have mentioned the total lack of trust and confidence among those medium-sized and large businesses whose rates bills do the heavy lifting in this area of local government finance. I have previously pointed out the business rate unfairness, its asymmetry with regard to the use of local government services and the dangers of gaming the system of valuation and fair access to appeals, which have now gone on for many years. The Government may consider that the fundamental review that they have responded to will save business rates as a tax, but I am fairly confident that, economically and practically, it is probably too late.

I believe that the Minister is an honourable man. I do not blame him: he inherited this situation, so I give him the benefit of the doubt in suggesting that he can do something about rolling back a bad position in his response today, which I await with interest. That is why I oppose Clause 1 standing part of the Bill.

[Lord Cormack (Con)]

My Lords, I endorse what the noble Lord, Lord Hunt of Kings Heath, said—not for the first time, on a variety of subjects. When we debated in Grand Committee a couple of weeks ago, it was a very peculiar and unsatisfactory situation. The date had been changed twice. I do not particularly complain about that—it was nothing to do with the ghastly, terrible tragedy of the murder of Sir David Amess; it was changed irrespective of that—but there should have been a proper Second Reading and there should have been proper consultation with those such as the noble Lord, Lord Hunt of Kings Heath, and others who had indicated an interest in the Bill.

My interest is entirely with Clause 1, and I will not say anything later, because I will not move my amendments. They were tabled with advice from the clerks, for which I am extremely grateful, merely to try to ensure that the Bill would not come into force until at least six months after we knew about the distribution of the £1.5 billion. We may return to that on Report—I take it that there will be a proper Report on the Floor of the House, because we are not allowed to vote in Committee, for reasons we all know, appreciate and understand.